Executives at the two largest cable companies — Comcast and Time Warner Cable – kicked off last week's Merrill Lynch Media Fall Preview conference with two slightly different views on one of the industry's next big things — DOCSIS 3.0.
Comcast chief operating officer Steve Burke, speaking last Tuesday at the Marina Del Rey, Calif., conference, reiterated Comcast's stance on DOCSIS 3.0, the high-speed data standard that will boost speeds to between 50 Megabits per second to 160 Mbps. Comcast has said that it plans to roll out DOCSIS 3.0 to about 20% of its footprint by the end of this year. Already it is offering a 50 Mbps service in Minneapolis for about $150 per month.
Burke said that DOCSIS 3.0, with its vastly higher speeds, will be yet another differentiator for cable. And that, he said, could play a role in capturing an even bigger slice of the broadband pie.
Cable already has been winning the battle against digital subscriber line service from phone companies. According to Leichtman Research Group, in the second quarter cable companies controlled 54% of the overall broadband market, with a 5.6 million subscriber advantage over the top telcos.
“There are about 15 million DSL customers in our footprint,” Burke said. “I would love to see us — through DOCSIS 3.0 and continuing to be aggressive — take 5 or 7 or more million DSL customers away from the RBOCs and back to cable over the next few years.”
Later in the conference, Time Warner Cable chief operating officer Landel Hobbs, took a less aggressive stance on the technology, saying that his company would take a “surgical” approach to rolling out DOCSIS 3.0.
“We look at it [DOCSIS 3.0] on a surgical basis,” Hobbs said. “We will do it selectively where we need to.”
Hobbs added that the DOCSIS 3.0 service would be a “super-premium” service, priced even higher than what the company charges for Turbo, its premium high-speed product.
Burke also gave an update on the cable interactive-advertising venture, dubbed Project Canoe. Canoe CEO David Verklin has already named a chief technology officer — former Advance/Newhouse Communications executive Arthur Orduna — and has hired about one dozen people for the venture, he said. He added that individual cable companies have announced some early initiatives, including the VOD political advertising initiative “Election 2008,” launched by Comcast, Time Warner Cable, Charter Communications, Cablevision Systems, Cox Communications and Bright House Networks.
“I think what you are going to see in the next six to 12 months is more and more of those announcements,” Burke said. “And then someday, it's going to be a very substantial business for us.”
Burke later estimated that cable advertising is about a $5 billion to $6 billion business annually for the industry. He projected that with interactive capabilities that pot could double or triple over time.
Burke said that Verklin has just started discussions with advertisers about interactive services, but said that so far the feedback has been favorable.
“The interesting feedback we've gotten so far is that whether it's big cable content channels or broadcasters, they're as excited, if not more excited, about this than we are,” Burke said.